Major Timeshare Investment Spotlights Sector

The timeshare sector isn’t talked about a lot in commercial real estate, but a recent deal might bring it more attention.

Marriott Vacations Worldwide Corp. is buying competitor ILG for $4.7 billion. The deal gives it 40 properties with 250,000 owners on top of the 65 it currently holds worldwide with 400,000 owners. ILG’s ownerships are currently through Vistana Signature Experiences and Hyatt Vacation Ownership. The deal especially strengthens Marriott Vacations in Mexico and the Caribbean.

One of the goals of the combined company’s management is to grow even more, through new assets and strategic acquisitions.

At least one analyst likes the ILG acquisition because scale in the timeshare business is very important, he said, because membership customers like as many choices as possible, and Marriott Worldwide certainly now has tremendous reach.

The timeshare industry has grown annually for the last seven years, according to an American Resort Development Association report released last June. Sales of timeshares in 2016 reached $9.2 billion in 2016, up from $8.6 billion the prior year. Meanwhile, rental revenue increased by five percent, to $1.9 billion, while occupancy hit 79 percent, up from compared to 65.5 percent at hotels the same year, according to Smith Travel Resource numbers quoted by ARDA. It was also calculated that there are a total of 1,558 timeshare resorts in the United States in 2016 with just over 206,000 units. Obviously, the sector’s size makes it formidable.

In other timeshare news that’s not as favorable, some multifamily residents in Kissimmee, Fla., near Orlando, apparently aren’t happy that Airbnb’s Niido hotel concept, which it is bringing to a 324-unit complex called Domain, mixes the uses where they live. They claim they weren’t told that part of the facility would become a timeshare-like destination for travelers until after they signed leases. Airbnb reportedly has six more of these in the works in Florida, so if this is any indication, it could be a challenge to put the two product types together going forward.

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